Saturday, December 31, 2011

Investing in Gold.

Many ways to invest in Gold - Which is best option?

Published on Thu, Dec 29, 2011 at 09:32 |
Source :
Updated at Thu, Dec 29, 2011 at 12:56

Sanjay Matai
In recent years gold has delivered exceptional returns. In a span of about 6 years — from 2006 to 2011 — gold has given an average return of an “incredible” 29% per annum. Therefore, it is but natural to be attracted towards gold. But let’s not forget history. In 1980, gold prices jumped from 300 $/oz to 600 $/oz due to Gulf crisis. But soon thereafter fell to about 450 $/oz in 1981 and then NEVER crossed the $450 mark until 2006. In other words, gold gave ZERO returns over a period of nearly 25 years. The question, therefore, arises — are we going to witness something similar once this worldwide financial crisis is over? Is this a bubble that will burst? The answer, unfortunately, will be known in the future only.

Therefore, caution is advised, if you intend to invest in gold — especially now when it is trading at historic levels of 1600-1800 $/oz. However, from the asset allocation point of view, some portion of one’s portfolio should be in gold. Accordingly, let us explore the different avenues available today to invest in gold.

a) Physical gold from jewellers/banks
Buying physical gold from jewellers has been the traditional way since centuries. And within physical gold, jewellery has been the most common form of purchase. The balance, in relatively small quantities, has been the gold coins and bars.

Recently, banks too have started selling gold coins/bars.

b) Gold ETFs
Gold ETFs are mutual fund schemes that invest only in gold. Thus it is as good as holding gold; except that it is held electronically. Generally 1 unit of Gold ETF is roughly equivalent to 1 gram of gold and hence its price is also roughly equal to price of 1 gram of gold. You can buy a minimum of 1 unit of Gold ETF.

Recently, a fund-of-fund (FoF) type of scheme has been launched that invests in Gold ETFs. There is no difference per se, except that these funds do not require a demat account and also enable an investor to do systematic investment planning (SIP), which is not possible with ETFs.

c) Equity-based Gold Funds
These are mutual fund schemes that — instead of investing directly in gold — buy the equities of companies engaged in mining, extraction, processing and marketing of gold.

d) e-Gold
Launched recently by the National Spot Exchange, e-gold is also an electronic form of holding gold — except that herein you are directly the owner of gold whereas in Gold ETF the Asset Management Company is holding the gold (of course, on your behalf).

Unlike Gold ETF, e-Gold also offers the facility of physical delivery. However, given the additional costs involved viz. delivery charges, VAT and octroi, it may be better not to opt for physical delivery.

e) Gold Futures
This is just a short term product useful mainly for ‘trading’ in gold and not ‘investing’ in gold. Hence, it is kept out of the purview of this article.

Which option to choose

Given this wide variety of options, it is but natural to ask — which amongst these is the best alternative to buy gold?

If you intend to buy gold as jewellery for personal use, then of course, there is no option but to go to a jeweller. However, it may be noted that heavy making charges involved in jewellery will eat into the returns, if you use it as an investment.

And if bars and coins are desired, jewellers would comparatively be a better option as (a) their charges are generally lower than banks and (b) as on date banks can only sell gold — they cannot buy it back.

But if gold is being bought for investment purposes, holding it electronically has many advantages over physical holding.
Low cost : To buy Gold ETF or e-Gold, you have to pay only the brokerage charges, which are usually around 0.5%. Vis-à-vis this, you may have to shell out anything between 10 to 20% as premium and/or making charges if you buy physical gold.

Of course, for ETFs you will have to incur the fund management charges (about 0.5-1%) every year, whereas e-gold and gold kept at home with no insurance could mean zero holding cost.

Transparent pricing: For ETFs and e-Gold, the rates are linked to the international prices. But price of physical gold invariably varies even across various jewellers and banks within the same city. Thus, there are chances of paying more than the international price if you are buying gold from your local jeweller or banker. Moreover, even at the time of selling, you may have to take a large cut, especially if you sell to a different jeweller.

Purity: Gold ETF and e-Gold are of the highest purity and duly certified. But for jewellery, you have to trust your jeweller.

Convenience: To buy Gold ETF or e-Gold, just a phone call to your broker or the click of the mouse is sufficient. You don’t have to personally visit the jeweller/bank.

Security: No one can steal your Gold ETF/e-Gold units. Physical gold, however, carries high risk of theft.

Capital Gains Tax: In case of physical gold, the long-term capital gains tax becomes applicable only when the holding period exceeds 3 years. This limit is just 1 year in case of Gold ETFs. However, e-Gold is treated as a long term asset only after 3 years.

Wealth Tax: Physical gold attracts Wealth Tax but Gold ETF is exempt. However, E-Gold attracts Wealth Tax.

So there is a trade-off between Gold ETF and e-Gold. Though e-Gold works out cheaper than Gold ETF as there are no fund management charges (and, depending on your broker, possibly lower brokerage charges also), it is taxable under Wealth Tax and it becomes Long Term Capital Asset after 3 years.

Accordingly, whether Gold ETF is good for you or e-Gold, will be determined by your investment amount, time-frame and applicability of Wealth Tax.

As regards the other options:

 Fund-of-Fund schemes in Gold ETFs are slightly expensive as, apart from the annual fund management charges of the ETFs, you also have to bear the annual fund management charges of the FoF scheme. Therefore, if feasible, it is better to invest directly into Gold ETF rather than take the Fund-of-Fund route.

 Equity-based gold funds are riskier than gold ETFs/e-gold as there is an added element of equity risk in such funds. Moreover, there are no listed companies in India associated with gold. Hence, these funds have to invest in the international market. Therefore, these funds are essentially global funds; susceptible to currency-risk apart from equity-risk and gold-price risk. Given the substantially higher risk element, such funds ideally suit investors with high risk appetite. For the vast majority, however, buying Gold ETFs/e-Gold would be a more prudent option.

Concluding, therefore, Gold ETF and e-Gold would be the most preferred options amongst the various alternatives.
Sanjay Matai is a personal finance advisor ( ) and author. ‘Millionaires don’t eat cakes…they make them ’ is his latest publication.

Welcome 2012: 5 India Positive stories we understated in 2011

Saturday , December 31, 2011 at 18 : 39
Welcome 2012: 5 India Positive stories we understated in 2011
The New Year ushers in a vibrant and an exciting year ahead. It is also a time where the majority of the people look to recharge themselves for the challenges ahead. The past year was a year that was filled with major events and it was also a year where some of us missed some of the significant yet understated events of 2011. Sometimes at the end of the present year, it helps us to reflect and try to look at some India positive stories that were camouflaged in between the gamut of popular news.

Indian Army's rising might:
The Indian military had a significant year last year. Strategically, it had empowered its military base in order to compete with the regional powers in Asia. According to the 2011 report by weapons watchdog SIPRI, India is the largest military weapons importer in the year accounting for 9% of the international weapons market between 2006 and 2010. In addition, India is planning to spend $80 billion in expenditures till 2015 including acquisition of sea vessels as part of the purchases.

The "Jugnu" Technological invention by the youth:
One of the significant technological achievements in the past year is the nano satellite Jugnu that has been developed by the students in the mechanical engineering department at IIT Kanpur. The satellite weighs only 3 kg and is distinguished as one of the tiniest nano satellite's that exists today in the world. Since the Indian Space Research Organization (ISRO) does not have an ejection system for weights less than 10kg, the students designed it from scratch to achieve this milestone. After going through intense tests, it was approved thus making a significant stride in the world of space technological enterprise.

Sports besides cricket do win big:
We won the gold medal in Kabaddi World Championship this year and more recently Shiva Kesavan also got the gold in the Luge event in the Asian cup in Japan this year. Well, luge is a sport and I didn't misspell the world. Kesavan's achievements were noticed but largely overshadowed by the cricket phobia country. In addition to this, the archery team performed creditably with the trio of Deepika Kumari, Chekrovolu Swuro and Laishram Bombayala Devi finished runners up in the recently concluded World Championships

Dr Devi Pratap Shetty's Economist Honour:
The Economist magazine honored Dr Shetty for his tremendous contribution to Indian health care by giving him the Innovation award. Even though he is one of the most celebrated surgeons in India, one of his major accomplishments has been his ability to provide cost effective medication to the larger sections of society. He has performed more than 15,000 heart surgeries and charges a meager $2,000 per surgery while his contemporaries in the US charge anywhere between $20,000 to $100,000. With an astute use of technology and modern equipment's, he has reduced the cost to the common man without any compromise on the quality of the treatment.

Jana Gana Mana @100:
Our symbolic and poignant National anthem completed a century this December 27th. While India awaits Sachin's 100th century every minute, barely do we hear about the mentioning of the 100 years of the national anthem. The great poet Tagore performed this song in the Calcutta session of the Indian National Congress in 1911, it was the dawn of the most revered piece of art that the nation has ever seen. There is no other piece of musical masterpiece that has traversed a century yet retains its reach across the masses. Even today, when we stand up for our national anthem, the music is soul stirring and resonates across Indians all over the world.

Whats the point of all these stories? The point is simple. Even though the news provides us information, sometimes it is required to look beyond the news to carve out the gems that go under the gamut of popular news. Since there is so much news and information, the ability to pick out real events that do not gain headlines is sometimes nonexistent. News is what we seek rather than what is fed to us and it helps to look beyond the lens to ensure we don't miss some of the best news stories. Let's hope that happens in 2012.

Wishing you a very happy 2012 and a great year ahead!!

(The author can be reached on his Facebook page)

Built not to last forever
Dec 31, 2011, 12.00AM IST
I have two old wooden statues in my living room. They stand about three- and-a-half feet high, and are beautifully carved representations of young women - not voluptuous like some ancient goddesses' statues, just young women, slowly growing into their maturing bodies.
Gifted to us by a dear friend, for about 20 years we have had these beautiful women in our living room. They are not goddesses, as the symbols and signs they bear and other indications through our extensive iconographic research points out. They seem to be designed more like dwarapalas or paired doorkeepers at the entrance to a shrine or temple, but they do not show any indication of once having been attached to a door or to pillars, being carved fully in the round as they are. They look about sixteen years old and are full of promise of things to come - or perhaps this is what i like to read into them.
However, for a while we have noticed with dismay that the soft wood they have been made of has been slowly flaking away, even crumbling. They are old, not ancient, but the material is not teak or some other hard, long-lasting wood, but what is locally called jangli or common forest-tree wood that has not been weathered or aged. It is as if the carver lavished all this special attention on two very ordinary blocks of wood, to create these objects of true beauty.
We read many stories of artists taking a great amount of care in searching out and selecting the 'perfect' materials for their works of art - flawless marble, tough metal, or strong, aged wood.
And then there are those other artists, equally wise if not wiser, who think - "Ah well, if this is what's before me; this is what i must use. How can i work with it to make it truly beautiful?" A beautiful life lesson indeed!
Feeling miserable at first as i moved the statues to a new location in the room, it suddenly dawned on me that real beauty is often short-lived, even ephemeral. These will last as long as they will, and will slowly crumble back to the earth.
I am reminded once again of the ancient Vedic fire altars, carefully built for ritual worship according to strict guidelines, and then later completely dismantled when the ritual was 'done'. The large, intricate sand-painting mandalas of Tibetan Buddhists, created with deep meditative awareness, are swept away when they have served their need.
The Taoist ritual space, or altar, called daochang or daotan, reflects the structure of the cosmos, and is visualised as a sacred mountain connecting the human and divine realms. The altar is taken apart when the ritual is complete.
When my father lay dying in a hospital bed, and we, his family, watched in pain as his organs failed one by one and he grew into a shadow of the vibrant person he used to be, at a moment of precious insight i unexpectedly felt swept over by a strange sense of peace: we, like the ancient sacred altars and sanctified ritual implements, are not built to last forever.
Hopefully we serve our purpose, we delight others through the beauty of our being, we worship and honour our Creator through our everyday acts and interactions with others around us - then crumble back to the earth.
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Why should the consumer sacrifice?

Shombit Sengupta, India Express.Posted: Sun Jan 01 2012, 23:21 hrs

Consumers in India suffer unhygienic experiences, erratic price and irregular availability in daily food and FMCG products. Small farmers are suffering the middleman who’s depriving them a fair price. Political opponents to allowing FDI (foreign direct investment) in multi-brand retailing are shouting that mom&pop stores need protection and consumers will be cheated with high prices. Is that really so?

India has allowed 100 per cent FDI in lifestyle sectors such as automobiles and consumer electronics among others. That’s raised consumer choice and desire levels sky-high. Speedy foreign motorcycles and cars are dangerously dashing down appalling road infrastructure in urban and rural areas. Consumers are flouting traffic norms, hiking up fatal accident rates. Before allowing this FDI, did the government first secure the roads, safety and traffic control measures? Did political parties make a noise then? Yet when consumers and farmers would gain price advantage rather than remaining in the sacrificing dock, some political parties are barricading FDI in multi-brand retailing. Of course, the powerful trader middlemen will be eased out when this happens, is that the stumbling block? Countries like China, Vietnam and Chile that initially hesitated but have since opened 100 per cent FDI to multi-brand retailing are today enjoying the investments, job creation, introduction of technology and infrastructure. Consumers are benefiting from better pricing, better quality. As per Chinese analysts, entry of Walmart and Carrefour has changed the way Chinese companies manage business. Local Chinese retailers like Shanghai Bailian group, Suning, Gome and Dashang still dominate the retail market as they’ve quickly learnt how to set up new supply chain systems. In fact small retail outlets have risen in China from 1.9 million to 2.5+ million since 2004. US market researcher RNCOS has projected that Vietnam’s retail market sales will increase from $39 billion in 2008 to $85+ billion by 2012. In 2009 alone, FDI in Chile was $6.21 billion. Similarly Argentina, Brazil, Indonesia, Malaysia, Russia, Singapore, and Thailand have allowed 100 per cent FDI in multi-brand retail since 1990s. According to a Columbia University study, 10 years after Indonesia opened FDI, small traders continue to retain 90 per cent of the business.

The large majority of farmers in our agrarian economy own just two acres per family of about seven members. They barely generate Rs 50,000 per year, input costs can reach Rs 30,000. Poverty deprives them of transportation means, so they’re dependent on intermediaries to sell their produce. In a bumper harvest, wholesale market prices dip drastically, leaving the farmer unable to recover his cost. For a kilo of tomatoes, farmers in Barpeta, Assam have even got only 50 paise, whereas Guwahati consumers buy that kilo at Rs 25. Farmers may even jettison unsold produce, as carrying that home would entail transportation cost. Both farmers and consumers lose here, the chain of middlemen dealers from farmer to consumer clearly wins. No government has resolved unemployment, so common people set up mom&pop stores as a route to survival. The Government grants their licence, but without establishing any inspection system. Take the case of edible oil where about 68 per cent is unbranded and sold loose. Mom&pop stores are a kind of godown for simultaneous stock-and-sell. Unhygienic conditions prevail in a large number of mom&pop stores. The poor consumer becomes the victim when there are no mandatory checks on quality standards. Unlike organised retails where you can interface what you buy, mom&pop stores actually exercise an anti-democratic consumption pattern. Manufacturers spend excessively for brand promotion, but consumers are always dependent on the counter salesman’s recommendation at mom&pop stores to get the product.

Organised multibrand retails, particularly hypermarkets invented by the French, have the extraordinary mission of benefiting consumers through lower cost, higher quality. Economies of scale make this possible. Large retailers go directly to the source. Here the farmer, retailer and consumer all benefit with competitive pricing. In the West, such retails became gigantic only because consumers defended them. From the 1980s, when retailers found that manufacturers were continuing to raise prices for their own interest, they challenged them with the “private label” concept. Retailers created private label brands and offered them to consumers at 30 per cent lower cost from national brands. Consumers found no quality deficiency here and lapped them up. The result is that FMCG category private labels comprise nearly 60 per cent market share in developed countries.

Like several developing countries did, India will gain from 100 per cent FDI for multi-brand retailing as it’s the biggest sector for the economy’s growth. A new hygienic discipline will be put in place for everyday consumption products. Consumers will enjoy outstanding choice, competitive pricing of national and international brands, highly discounted private label pricing and a regular loyalty program. Small farmers will get a fair deal in directly selling to retailers. Retailers will have massive control over short duration perishable products. Current mom&pop store employees with their acquired knowledge of retails will get better jobs in organised retails. Intelligent mom&pop store owners will learn how to convert to elegant convenience stores. Their standard will improve, they’ll not be wiped out.

Consumer demand is so high in developed countries that industry, government and politicians cannot ignore it; they have to respond in accordance. Actually it’s not only manufacturer magnanimity that offers consumer benefit, pressure from consumers has ensured that consumer benefit becomes the bottomline in retailing. The time has come for Indian consumers to stop sacrificing and start demanding. Let’s enjoy 2012 with 100 per cent FDI in multi-brand retailing, freedom of choice and spend less money at the multi-brand retail.

Shombit Sengupta is an international creative business strategy consultant to top management. Reach him at

Nigeria: declares state of emergency

Nigeria's Jonathan declares state of emergency


By Felix Onuah and Tim Cocks
ABUJA | Sun Jan 1, 2012 9:38am IST
(Reuters) - President Goodluck Jonathan declared a state of emergency on Saturday in parts of Nigeria plagued by a violent Islamist insurgency, and ordered shut the borders with Cameroon, Chad and Niger in the northeast.

Coming nearly a week after radical sect Boko Haram set off a series of bombs across Nigeria on Christmas Day, including one at a church that killed at least 37 people and wounded 57, Jonathan told state television the measures would aim to restore security in troubled parts of Nigeria's north.

"The temporary closure of our borders in the affected areas is only an interim measure designed to address the current security challenges and will be resumed as soon as normalcy is restored," he said.

He added that his chief of defence staff had been instructed to take other "appropriate" measures, including setting up a special counter-terrorism force.

The blasts have raised fears that Boko Haram, a movement styled on the Taliban and whose name means "Western education is forbidden", is trying to ignite sectarian strife in Nigeria, Africa's most populous nation and top oil producer.

Jonathan has been criticised by the opposition and Christian groups for what they said was a slow response to the bombings.

"The crisis has assumed a terrorist dimension," Jonathan said. "I therefore urge the political leadership (in northern local governments) to give maximum cooperation to ensure that the situation is brought under control."

He listed the northern local governments affected by the decree, including a part of Niger state near the capital Abuja, the northern half of the conflict-prone city of Jos, and parts of Yobe and Borno in the remote, semi-arid northeast.

The bombings by the northern-based movement have strained Nigeria's already fractious north-south divide.

Jonathan, a Christian from the south, upset many northerners by running for and winning the presidency in April, which in the eyes of many tore up a tacit deal to rotate the top job between a northerner and a southerner every two terms.

More than 500 people were killed in post-election violence in the north after Jonathan's victory, reflecting long-standing northern grievances about perceived alienation and exclusion by the central government from the fruits of national oil riches, concentrated in the south.


Earlier in the day, Jonathan visited the scene of the deadliest Christmas attack, on St. Theresa's Catholic church in Madalla, on the outskirts of Abuja.

"We will crush the terrorists. If there are institutions ... which are harbouring terrorists, we will deal with them," he told weeping relatives of the victims gathered in the church, amid tight security by dozens of armed soldiers.

Traces of the devastation were still evident, with the church windows shattered and glass on the ground.

National Emergency Management Agency spokesman Yushua Shuaib said authorities were on "full alert" for more attacks.

"The government has put security throughout the federation, including near the flashpoints. We are optimistic, but we are fully mobilised," he told Reuters.

The government held an emergency meeting with security officials on Thursday and is also looking at using other channels to stop the conflict, which started as a local northern problem but is fast destabilising the whole country.

National Security Adviser General Owoye Andrew Azazi told Reuters the security services were considering making contact with moderate members of Boko Haram via "back channels", even though explicit talks are officially ruled out.

In Jos, which was also bombed at Christmas, two dozen armoured personnel carriers were patrolling the streets ahead of New Year celebrations.

The commissioner of police for Plateau state, Dipo Ayeni, told Reuters: "We have deployed this tactic of a show of force so that we can celebrate the New Year without any hindrance, and so there should be no cause for panic."

"The events that caused Nigeria's civil war are repeating themselves," said Uche Udemezue, an Igbo woman in the southeast, referring to the secessionist war of her people against northern rulers in which more than a million people were killed in the late 1960s.

"The north should know nobody has a monopoly on violence."

Attacks in and around the capital - including one on the U.N. headquarters in August that killed at least 24 people - suggest Boko Haram is trying to raise its jihadist profile.

In a separate, unrelated incident, clashes between rival ethnic groups in southeastern Nigeria's Ebonyi state on Saturday killed at least 50 people, the state government spokesman said, and police said mobile units had been sent to the state to quell the violence.

There was no suggestion they had anything to do with wider security problems, but the clashes are likely to add to Jonathan's woes at a time when his forces are already stretched.

(Additional reporting by Tife Owolabi in Jos and Anamesere Igboeroteonwu in Onitsha; Writing by Tim Cocks; editing by Tim Pearce)
50+ Stunning Glow of Glamour Photography

Posted admin in Photography on December 29th, 2011 / No Comment
The Fashion Photographers use there professional and amazing camera techniques to give the most stunning portraits and make model more attractive and sexy. The most important aspect of shooting Fashion and glamour photography is a look of model and the most important thing to achieve these looks is hair and makeup. The art of Fasion photography, creativity and presentation made these Model to Glow in Glamour. The intent is to display the likeness, personality, and even the mood of the person. In ths article we have tried to show you 50+ Stunning Glow of Glamour Photography..
Glow of Glamour Photography
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